KLab FY2022 1Q Presentation Material

Key insights

7 takeaways

01
KLab reported Q1 2022 revenue of 4,111 million yen, marking a 20.7% decrease quarter-over-quarter and a 35.7% decline year-over-year, largely due to the transfer of 'Love Live! School Idol Festival ALL STARS'.See it on page 4
02
Despite revenue contraction, the company narrowed its operating loss to 281 million yen through disciplined cost-reduction initiatives and previous restructuring efforts.See it on page 4
03
Overseas revenue fell to its lowest level since 2017, currently representing approximately 40% of the company's total game business.See it on page 9
04
Performance remains dependent on established titles, with 'BLEACH Brave Souls' benefiting from a PS4 release and 'Utano☆Princesama Shining Live' showing growth in domestic and global markets.See it on page 5
05
KLab is pivoting toward Web3 and metaverse sectors by establishing BLOCKSMITH&Co. and partnering with the Thirdverse Group for VR development.See it on page 22
06
The company is collaborating with external partners, including Electronic Arts and various animation studios, to build a new development pipeline intended to stabilize future performance.See it on page 12
07
Financial stability is currently supported by increased cash reserves from bank loans, which are being allocated toward software development and intangible asset growth.See it on page 10

Summary

KLab’s fiscal year 2022 first-quarter financial results reflect a period of transition characterized by declining revenue and ongoing efforts to optimize operational costs. The company reported revenue of 4,111 million yen, representing a 20.7% decrease compared to the previous quarter and a 35.7% decline year-over-year. This downturn is primarily attributed to the transfer of the operation of the title Love Live! School Idol Festival ALL STARS. Despite the revenue contraction, the company successfully narrowed its operating loss to 281 million yen, aided by disciplined cost-reduction initiatives and the impact of previous restructuring efforts.

The company’s performance remains heavily reliant on its established mobile gaming portfolio. While titles like BLEACH Brave Souls and Utano☆Princesama Shining Live showed resilience—with the former benefiting from a successful PlayStation 4 release and the latter seeing growth in both domestic and global markets—other titles experienced seasonal or trend-based declines. Overseas revenue, which currently accounts for approximately 40% of the company's game business, reached its lowest level since 2017, reflecting a reduced number of active titles and a lack of large-scale promotional campaigns during the quarter.

Looking ahead, the company is focused on diversifying its business model through new development pipelines and strategic expansion into emerging technologies. Key initiatives include the establishment of BLOCKSMITH&Co. to spearhead blockchain and Web3 gaming projects, as well as a partnership with the Thirdverse Group to leverage VR and metaverse expertise. Additionally, the company is actively developing new titles in collaboration with external partners, including Electronic Arts and various animation studios, to stabilize performance until these new products reach the market. Financial stability is currently supported by increased cash reserves from bank loans, which are being directed toward software development and intangible asset growth.